The Air Force’s critical Nunn-McCurdy Breach declaration for its Global Positioning System (GPS) Next-Generation Operational Control System (OCX) was predictable and shouldn’t complicate the program further, according to an expert.
Lexington Institute think tank COO Loren Thompson said Friday at least half of the blame for the OCX problems rest with the Air Force as he believes prime contractor Raytheon [RTN] simply did not get adequate indication of what performance goals it would need to satisfy. On the other hand, Thompson said Raytheon did not fully grasp how demanding the OCX cybersecurity features would be.
Thompson said the issues compounded when all of the Air Force’s negotiating team from the 2010 contract award quickly moved on to other jobs. This, he said, cost the stakeholders years to figure out the program was off course and to get it back on the right path.
A Nunn-McCurdy Breach takes place when a major defense acquisition program (MDAP) experiences cost overruns that exceed certain thresholds. There are two types of breaches: significant and critical. A significant breach occurs when the program acquisition unit cost or the procurement unit cost increases 15 percent or more over the current baseline estimate or 30 percent or more over the original baseline estimate.
A critical breach occurs when the cost increases 25 percent or more over the current baseline estimate or 50 percent over the original baseline estimate. The Air Force said Thursday in a statement factors leading to the breach include inadequate system engineering at program inception, Block 0 software with high defect rates and Block 1designs requiring significant work.
Additionally, the Air Force said the complexity of cybersecurity requirements on OCX and the impact of those requirements on the development caused multiple delays and that the corrective actions to resolve these problems took much longer than anticipated to implement.
The Air Force said Raytheon has not received any fee on the OCX contract since August 2013, but received $44 million in award and incentive fee payments up to that point. The total amount of fee Raytheon has lost since contract award is $48 million with roughly $65 million in fee remaining available on contract. All remaining fee opportunity is being restructured to be earned only upon delivery of Block 0 and Block 1, the Air Force said.
The Air Force will have the second of its quarterly reviews for OCX on July 7, according to service spokeswoman Capt. Annmarie Annicelli. This review, she said, will focus on Raytheon’s progress against the plan presented at the first review on March 8, which approved the new schedule and established 11 key milestones to track Raytheon progress against the plan. Annicelli said these include three Block 0 and eight Block 1 milestones leading to the delivery of both capabilities.
Another expert, Andrew Hunter of the Center for Strategic and International Studies (CSIS) think tank, said he is unsure how likely OCX is to survive. He said on one hand, DoD acquisition czar Frank Kendall has been working to fix the program for a few years, meaning it’s possible that the underlying issues causing the cost growth have been addressed. Hunter said, on the other hand, it is possible that since DoD has already tried to fix it, it might be easier to write the program off.
Both Hunter and Thompson agree that the OCX capability is critical to the GPS III satellite constellation. Thompson said without OCX, the Air Force won’t be able to use the latest GPS III codes, including military code, and, thus, the value of the constellation would be reduced.
The Air Force said the Nunn-McCurdy process, which includes additional oversight and scrutiny, is expected to conclude in October. Raytheon declined to comment. The Air Force did not respond to a request for comment at press time.